National Australia Bank faces possible scrutiny from regulators over the wording of a document issued to Australian retailers and other merchants that suggests they are not able to surcharge debit and credit cardholders for accepting contactless transactions. In a written guide on the terms and conditions governing service agreements between the bank and thousands of merchants across the country, NAB tells businesses subscribed to its payments service plans that surcharging for contactless transactions is not available through the bank’s service offering. “Pre-authorisations and surcharging are not available with contactless transactions,” the bank tells merchants in the guide. The guidance appears to be misleading and might be in breach of the Reserve Bank’s surcharging standards that have been operating since March 2013. The RBA standards do not prohibit retailers and other businesses using merchant terminals from claiming the cost of accepting a contactless debit or credit card transaction from customers. An RBA spokesperson confirmed to Banking Day on Monday that “merchants should be able to surcharge customers who pay with a debit card or credit card using the contactless method”. While NAB will probably need to amend parts of its merchant guide to more accurately reflect the fact that contactless transactions are surchargeable under the regulator’s standards, the bank could be exposed to fallout if enough merchants deliberately avoided surcharging customers to meet any perceived obligation under the guidance document. NAB has issued a guide to its terms and conditions for many years and references to surcharging not being available on contactless transactions have been included in previous versions of the document since at least 2019. Merchants using the guide to comply with the terms of their service agreements with NAB could potentially have foregone millions in unclaimed acceptance costs if the surcharging capability was not made available to them. Banking Day yesterday put a list of questions to NAB about the information given to merchants in the guide, including a query on whether the bank was considering amending the guidance in the document given that it did not accurately reflect the rights of merchants to surcharge. A bank spokesperson did not address that specific question, but insisted NAB’s merchant terminals were designed to support surcharging for contactless payments. “NAB terminals allow merchants to apply surcharges on contactless payments,” the spokesperson said. “NAB terminals support merchants in applying surcharges on transactions via a few simple steps.  “Thousands of merchants have surcharging enabled.” The bank spokesperson did not say whether surcharging had been available since 2019. NAB is under pressure to improve service delivery in the merchant acquiring market after the bank was identified by the Reserve Bank in March as having the lowest enablement rate for least cost routing among the major banks. Least cost routing is a service that allows merchants to select the lowest cost payments network to process contactless debit card transactions. According to the RBA data, NAB had made the service available to only 55 per cent of its customer base at the end of December last year. Only 14 per cent of NAB’s merchants had enabled least cost routing at the end of December